Some of your thoughts I agree with, but I can't help but to think that it's a transfer of sorts. My opinion of it is this.
The print is made on some type of paper, that could either be heat transferable or rub transferable. I find it hard to
believe that this was traced by hand, the lines are all very symetrical and the same width throughout the design.
I'm wondering if the print was made on regular printing paper, then a transfer pen ( weird little gadget but cool none the less) was rubbed on it to transfer the ink to the leather. The other curious part is that, it appears to be somewhat permanent because the machine did not rub any of it off.